Corporate Transparency Act Alert

Corporate Transparency Act Update: Fifth Circuit Reinstates Injunction, Halting BOI Reporting Requirements

On December 23, 2024, the Fifth Circuit Court of Appeals issued a ruling staying the District Court’s preliminary injunction. This decision temporarily reinstated the ability of the Financial Crimes Enforcement Network (FinCEN) to enforce the reporting requirements of the Corporate Transparency Act (CTA).

However, on December 26, 2024, the Fifth Circuit vacated its own stay, effectively reinstating the nationwide preliminary injunction. As a result, FinCEN is once again prevented from enforcing the CTA’s reporting requirements.

When the preliminary injunction was briefly stayed, FinCEN issued guidance extending the filing deadline for Beneficial Ownership Information (BOI) from January 1, 2025, to January 13, 2025. With the injunction back in effect, enforcement of the CTA and the filing deadline remain uncertain.

For now, while the nationwide preliminary injunction is in place, reporting companies are not obligated to comply with the BOI reporting requirements of the CTA. The injunction applies broadly to all aspects of reporting, including initial reports, updates, corrections, and other CTA-related filings, regardless of when a reporting company was formed. However, reporting companies may still choose to file voluntarily.

While enforcement is paused, businesses should still be prepared to file their BOI Report under the CTA Reporting Requirements in the event the injunction is lifted.  Given the uncertainty and potential penalties for non-compliance, businesses are advised to stay vigilant for any updates that might impact their reporting obligations.

Compliance Recommendations

• Review Reporting Obligations: Determine if your entity qualifies as a reporting company under the CTA and identify the specific reporting requirements. For a detailed overview of the CTA’s reporting requirements, refer to the article written by Ms. Yu earlier this year: What Business Entities Need to Know to Comply with the Corporate Transparency Act.
• Prepare Necessary Information: Gather required details about beneficial owners, including names, addresses, dates of birth, and identification documents.
• Consult Legal Counsel: Seek professional advice to ensure compliance with the CTA and to address any uncertainties regarding the reporting process.
• Monitor Official Updates: Stay informed about any further changes or guidance from FinCEN or relevant authorities that may impact reporting obligations. You may directly subscribe to FinCEN Updates through its website:  https://fincen.gov/boi

While The Law Offices of Jacqueline D. Yu does not offer CTA filing services directly, we recommend Eminutes, a Law Corporation, as a third-party provider. They will prepare the Beneficial Ownership Information Report(s) based on the details you provide and file them with FinCEN on your behalf.

Should you need further information about the CTA or how it applies to your entities, please contact Ms. Yu.